Steffy: Dr Pepper's tactics leave bitter taste

Updated 12:18 pm, Monday, January 23, 2012

Photo: Ronald W. Erdrich

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The plant in Dublin reportedly accounted for less than 1 percent of Dr Pepper/Snapple's annual sales. A settlement with Dr Pepper/Snapple means the plant will no longer make sugar-
sweetened
Dr Pepper.

The plant in Dublin reportedly accounted for less than 1 percent of Dr Pepper/Snapple's annual sales. A settlement with Dr Pepper/Snapple means the plant will no longer make sugar-
sweetened
Dr Pepper.

Photo: Ronald W. Erdrich

Steffy: Dr Pepper's tactics leave bitter taste

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This is Dr Pepper's New Coke moment.

Just as Coke once tinkered with its success, altered its classic formula and alienated customers, Dr Pepper has launched an assault on its own history, and a customer backlash is already brewing on the Internet. One online petition calling for a boycott of all Dr Pepper/Snapple products - which include A&W Root Beer, 7UP, Snapple, Canada Dry and RC Cola - had more than 19,000 signatures as of Friday. There's a "boycottdrpepper" hashtag on Twitter, and reports of at least one store as far away as California that pulled Dr Pepper/Snapple products from its shelves in protest.

The brouhaha erupted after Plano-based Dr Pepper/Snapple settled a lawsuit, filed last summer, against the small bottling company in Dublin that made its signature soft drink for more than 120 years. "Dublin Dr Pepper" was the stuff of Texas lore - made with cane sugar instead of corn syrup, using vintage 1920s equipment, from a small-town plant run for three generations by the Kloster family.

As part of the settlement, the Dublin plant will no longer make Dr Pepper. Fourteen people, some of whom had worked at the plant all their lives, lost their jobs, said Jeff Kloster, vice president of what's now called Dublin Bottling Works.

Hard-won mystique

Dublin Dr Pepper had that rarest of qualities among consumers: mystique.

"I am very saddened and outraged as well at all of this," Houstonian Jeremy Roach told me. "This was completely wrong. I will be boycotting Dr Pepper and all Snapple products from now until Dublin is restored its rightful operations."

For years, Dublin Dr Pepper's cult following was encouraged by the corporate office, which approved the Dublin plant's unique bottle design and Internet sales. Former and current corporate executives praised the beverage, and Dr Pepper's corporate website, as recently as early last year, directed visitors to the Dublin's plant's separate Web page, according to documents filed in the case.

"Everything we did, we did with their understanding and agreement," said Kloster, whose grandfather began working at the plant at age 13 and later inherited it from the Prim family, which founded the company in 1891.

After Dr Pepper/Snapple was spun off from Cadbury, its attitude toward the Dublin operation began to change.

"Admiration has turned to jealousy," according to court documents the Dublin plant filed. It claimed the big company wanted to capture the sugar-sweetened drink's success for its own.

In its lawsuit, Dr Pepper/Snapple argued that the Dublin bottler infringed on its trademarks and sold soft drinks outside its prescribed territory.

Barnes argued that Dr Pepper/Snapple had to think of its other bottlers, which were losing business to Dublin.

"Every bottle or can Dublin sold outside of its territory was a sale from a rightful Dr Pepper bottler," he said.

But people who bought Dublin Dr Pepper paid a premium and in some cases drove miles just to drink it. Dublin Dr Pepper was the iPhone of soft drinks. Barnes is suggesting customers will be just as happy with a BlackBerry.

Nor was the economic impact significant. The Dublin plant, Kloster said, accounted for less than 1 percent of Dr Pepper/Snapple's annual sales, which last year exceeded $5.6 billion.

Both sides are trying to put a positive spin on the bitter resolution. Kloster said his company will keep bottling other soft drinks and that it will keep the Dr Pepper Museum next to the factory in Dublin.

"We're not rolling up the sidewalks and closing the doors," he said.

Barnes said Dr Pepper/Snapple will still sell sugar-sweetened Dr Pepper - just not from Dublin. He noted that some of the drinks sold as Dublin Dr Pepper were made in Temple, because the Dublin plant couldn't handle the volume.

Dr Pepper/Snapple may have been within its legal rights, but what is legal isn't always what's right. Its tactics show it to be a company that has lost sight of its customers, of what makes its product special, and of the value of its own history.

Somewhere along the way, Dr Pepper became a corporate bully.

It may have won the legal battle, but it has lost something intangible, something that made its product unique in the beverage world. Now, it's just another soft drink.

Loren Steffy, loren.steffy@chron.com, is the Chronicle's business columnist. His commentary appears Sundays, Wednesdays and Fridays. His blog is at http://blogs.chron.com/lorensteffy. Follow him on his Facebook fan page and at twitter.com/lsteffy.